Precision Drilling says Canada rebound awaits price

* Natural gas drilling in Canada shrinks due to low prices

* Precision looks to international growth

* Shares down 17 Canadian cents

TORONTO, Sept 16 (Reuters) - Canadian oil and gas companies are unlikely to boost drilling to pre-recession levels unless prices rise significantly, an executive at Canada's biggest drilling company said on Wednesday.

David Wehlmann, executive vice-president at Precision Drilling Trust PD_u.TO, said weak natural gas prices are the main impediment to a renewed round of conventional drilling in Canada.

"It's dependent on what the eventual gas price is," he said following a presentation to a Toronto investment conference. "If the price gets up to $7 to $9 (per million cubic feet) range conventional drilling will return to the levels we saw in 2008. If it's $5 or $6 gas, it will come back somewhat, but not to those levels."

Natural gas prices have rebounded from multi-year lows touched earlier this month. But Canadian spot gas prices, at a recent C$3.34 per gigajoule, are still down by nearly half from a year ago and well below the C$11.10 per GJ touched in June, 2008, as the recession led to plunging demand, while mild weather and new supplies pushed storage of the fuel to record levels.

The number of wells drilled in Canada this year is expected to drop to 8,487, half of the 16,800 wells drilled in 2008, according to the Canadian Association of Oilwell Drilling Contractors.

The bulk of Canada's petroleum drilling comes from Western Canadian shallow producers, who typically drill hundreds or thousands of wells into reserves that are relatively easy to find but quick to deplete.

But the country's conventional reserves are running out, with gas producers moving into unconventional plays such as shale gas or tight sands that feature enormous reserves but require specialized and expensive technology to flow to the surface.

Those plays, such as the Horn River shales of northeastern British Columbia, which contain an estimated 500 trillion cubic feet of gas, require fewer wells but need expensive technology to fracture, or frac in industry jargon, the rock around the wellbore to increase output.

That technology means producers in unconventional gas plays are spending less on drilling and more on the services needed to boost production.

David Carey, a senior vice-president at Arc Energy Trust AET_u.TO, said fracturing now accounts for 50 percent of the costs of a well drilled into the company's unconventional gas plays.

"Five years ago it would have been, at most, 20 percent," he said.

However, Precision will not look to enter the robust market for fracturing to augment its drilling business, Wehlmann said.

"We're a driller and we'll stick to that," he said. "We want to grow our business internationally as opposed to adding other service lines.

Precision units dropped 17 Canadian cents to C$7.55 on Wednesday afternoon on the Toronto Stock Exchange.

($1=$1.07 Canadian) (Reporting by Scott Haggett; editing by Peter Galloway)